The “sports wars”: A contest theory approach to cities hosting game

Abstract

The competition among cities to host a sports team or a large-scale international sports event is modeled as a winner-pay contest with an entry fee. In the first stage, each contestant (city) decides whether to pay the entry fee (infrastructure required by the team, for example), which allows it to participate in the second stage, that is, the actual contest. We show that the contest organizer’s choice of the optimal entry fee does not depend on the number of contestants. Furthermore, in some cases, the result is a form of zero-sum game, in which the sports team or event organizer is the main beneficiary. The findings shed light on this type of competition and under what conditions on the entry fee a city might benefit from hosting a sports team or large-scale international sports event.